First Quarter Flash Financial Report for Fiscal Year Ended March 31, 2026

August 7, 2025

Company name: Japan Communications Inc. Listing: Tokyo Stock Exchange

Securities code: 9424

URL: https://www.j-com.co.jp/

Representative: Naohisa Fukuda, Representative Director-President and CEO Inquiries: Mitsuru Kodaira, Executive Officer and CFO

Telephone: +81-3-5776-1700

Scheduled date to commence dividend payments: -

Preparation of supplementary material on financial results: Yes

Holding of financial results briefing: Yes for institutional investors, securities analysts and the press

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended June 30, 2025 (from April 1, 2025 to June 30, 2025)

   Note: Comprehensive income For the three months ended June 30, 2025:	¥229 million	[39.8%]
   For the three months ended June 30, 2024:	¥164 million	[(71.4)%]

   1. Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.)

      	Net revenue		Operating profit		Ordinary profit		Profit attributable to owners of parent
      Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
      June 30, 2025	2,737	31.6	323	36.7	317	24.7	241	29.8
      June 30, 2024	2,080	21.3	236	(11.4)	254	(11.5)	186	(68.8)

      	Basic earnings per share	Diluted earnings per share
      Three months ended	Yen	Yen
      June 30, 2025	1.45	-
      June 30, 2024	1.12	-

   2. Consolidated financial position

   	Total assets	Net assets	Equity-to-asset ratio
   As of	Millions of yen	Millions of yen	%
   June 30, 2025	7,808	4,108	49.6
   March 31, 2025	7,340	3,870	50.4

   Reference: Equity

   As of June 30, 2025: ¥3,872 million

   As of March 31, 2025: ¥3,702 million

2. Cash dividends

   	Annual dividends per share
   	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
   	Yen	Yen	Yen	Yen	Yen
   Fiscal year ended March 31, 2025	-	0.00	-	0.00	0.00
   Fiscal year ending March 31, 2026	-
   Fiscal year ending March 31, 2026 (Forecast)		0.00		0.00	0.00

   Note: Revisions to the forecast of cash dividends most recently announced: None

3. Overview and management policy for the fiscal year ending March 31, 2026

In order to realize our mission of "transporting bits safely and securely," we are providing mobile communication services and mobile solution services and we are developing business providing communication and authentication platforms that guarantee identity and authenticity using our patented digital ID (FPoS) technology (hereinafter referred to as the "FPoS Business"). FPoS is a technology that has been recognized by the Financial Services Agency as contributing to ensuring the safety and improving the convenience of financial transactions.

In mobile communication services, we agreed with NTT DOCOMO, Inc. (hereinafter referred to as "DOCOMO") to interconnect with DOCOMO's voice and SMS network in February 2024 and we plan to launch a new service based on the interconnection in May 2026. This will allow us to develop new business as Neo-Carrier and we expect to provide 10 million lines in 2034.

In the FPoS business, an evaluation of institutional credibility based on the certification of the Electronic Signature Act has been penetrated as well as technical reliability. This will allow us to grow at a geometric progression and we expect to provide 100 million digital certificates in 2034.

Through the above services and business, we expect net revenue of 240 billion yen and profit after tax of 36 billion yen in 2034.

First, we will prepare for an interconnection with DOCOMO's voice and SMS network by May 2026, will try to expand our customer base through measures to raise awareness, and will try to establish FPoS's evaluation and to expand their case studies simultaneously.

1

1. Significant changes in the scope of consolidation during the period: None

2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None

3. Changes in accounting policies, changes in accounting estimates, and restatement

   1. Changes in accounting policies due to revisions to accounting standards and other regulations: None

   2. Changes in accounting policies due to other reasons: None

   3. Changes in accounting estimates: None

   4. Restatement: None

4. Number of issued shares (common shares)

   1. Total number of issued shares at the end of the period (including treasury shares)

      As of June 30, 2025	165,923,739 shares
      As of March 31, 2025	165,923,739 shares

   2. Number of treasury shares at the end of the period

      As of June 30, 2025	29,504 shares
      As of March 31, 2025	15,004 shares

   3. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

• Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm:nothing

• Proper use of earnings forecasts, and other special matters

A financial results meeting will be held on Friday, August 8, 2025 for institutional investors, analysts and the press. The Company plans to post a video of this financial results meeting on its website promptly after the meeting is held.

2

1. Explanation on operating results for the three months ended June 30, 2025

   1. Mobile Telecommunications Service (MVNO/MVNE business)

      Upon a ruling by the Minister of Internal Affairs and Communications in June 2020, since the Company launched the "Nihon Tsushin SIM" which provides flat-rate voice plans equivalent to those of major mobile phone operators in July 2020, the Company has continued to achieve growth both in the number of subscribed lines and quarterly revenue. As an awareness improvement measures to accelerate growth of "Nihon Tsushin SIM", the Company conducted first time TV commercials ("We cannot subtract any further. 290 yen" edition) and conducted the similar advertising on the Internet in the previous fiscal year. Also, the Company increased the data amount of "Reasonable Minna-no Plan" and "Reasonable 30-GB Plan" (current "Reasonable 50-GB Plan") with keeping their rate unchanged on September 30, 2024, to enhance competitiveness. These measures allow "Nihon Tsushin SIM" to be posted in a comparison website, SNS, etc. and its marketability and price competitiveness are highly valued. In addition, the voice service of the "Nihon Tsushin SIM" is not provided in prefix method, which has been adopted by many of MVNOs, and the Company provides services of comparable call quality as major mobile phone operators, though the price of the service is the lowest in Japanese mobile telecommunications industry. The Company considers the "communication quality," "billing plan" and "procedure and support" important and focuses on increasing customer satisfaction. And the Company was awarded the first prize of total satisfaction in the category of MVNO for the customer satisfaction survey on the mobile phone service for 2024, by J.D. Power Japan, Inc.

      Due to the awareness being improved and the products being evaluated, the revenue from "Nihon Tsushin SIM" has been growing for both individual and corporate subscribers and has been driving the Company's growth.

      In addition, as the Company agreed with DOCOMO about the interconnection with its voice and SMS network in February 2024, the Company is aiming for starting new service based on the interconnection in May 2026 (scheduled) and the Company is in process of building the mobile core network for the voice and SMS service. The Company plans to make its voice core system virtualized on the private cloud to improve the flexibility of service and to reduce the construction cost.

      Furthermore, the Company was allotted the mobile phone numbers (eleven-digit numbers starting with 090, etc.) from the Ministry of Internal Affairs and Communications in June 2025. The allotment of mobile phone numbers to MVNO is owing to the policy decision in December 2021 and the system reform in February 2023 by the Information and Communications Council of the Ministry of Internal Affairs and Communications, and it is the first time in Japan. The interconnection with DOCOMO's voice and SMS network requires the Company to be allotted the mobile phone numbers, and the Company is making steady progress in preparation for the interconnection.

   2. Mobile Solution (MSP business)

      In the telecommunications business through local mobile networks (local 4G/5G business) among the mobile solution (MSP business), the Company aims to build actual results in the U.S., where there are many advanced showcases, and leverage this experience to expand in Japan. The U.S. subsidiary of the Company operates a business that provides SIMs used for connections with local mobile networks in the U.S. market. Through the U.S. subsidiary, the Company is accumulating technologies and expertise on the telecommunications business through local mobile networks (local 4G/5G business), and by taking advantage of these technologies and expertise, the Company provides SIMs that can connect to local mobile networks set up by Japanese partner and customer companies.

      As Mobile Solution (MSP business), the Company also continues to provide various solutions using mobile telecommunication such as private SIM-to-SIM telecommunication, secure payment solution completely conforming to PCI DSS, the global payment security standard, upload-prioritized SIM for IoT devices and security cameras.

      In addition, the Company takes advantage of the technology and infrastructure of SIM authentication which the Company has developed in the U.S. to provide the new service based on the interconnection with DOCOMO's voice and SMS network.

   3. FPoS business

      As digital transformation (DX) is underway in many areas of society and the economy, the importance of digital IDs is recognized again, and the Company is pushing forward with a business that will establish and provide digital IDs that can be used on smartphones using FPoS, which is the Company's patented technology and the technology being recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. The authentication by FPoS is i) verification of a customer's identity by private key and electronic certificate, which are equipped with an IC chip in a customer's Individual Number Card, ii) generation of private key and issuance of electronic certificate by electronic certification authority, that is accredited under the Electronic Signatures Act, in Hardware Security Module (HSM) built in a customer's smartphone (iPhone and Android), and iii) guarantee of the identity (confirmation of the person's identity) and authenticity (confirmation that the person's intent is not falsified) of a customer by examining the combination of a public key contained in an electronic certificate and a private key.

      That is to say, an Individual Number Card is a trust anker in the authentication by FPoS and FPoS has a high-level security equal to an Individual Number Card. While an Individual Number Card can be used as a digital ID in administrative procedures, FPoS can be used as a digital ID and authentication infrastructure in a wide range of areas including administrative procedures by local governments and business operators.

      When a customer uses a service through applications on a smartphone, there is a problem that the customer could be impersonated and the customer's data (including personal information) could be falsified, however, if that service is secured by FPoS, the customer could not be impersonated and the data could not be falsified, because FPoS has a high-level security equal to an Individual Number Card. And there is also a problem that the customer cannot manage the business operators who have link to the customer's data (including personal information), however, if that service is secured by FPoS, the customer can confirm and manage the business operators who have link to the customer's data (including personal information) easily, because FPoS has a function of "Dynamic Opt-in" which displays the list of the business operators who have link to the customer's personal information and enables the customer to authorize or revoke the link to their personal information.

      To demonstrate the above potential of FPoS, the Company cooperates with Mebuku Ground Inc., a private-public partnership company made up of Maebashi City, private-sector business enterprises and universities. Since October 2022, Mebuku Ground Inc. operates "Mebuku App" which issues "Mebuku ID," a digital ID using FPoS technology.

      The Company released "FPoS library" which is a component of the core functions of FPoS, that are functions of identity verification, person authentication and data linking, in May 2024 (Please see the Company's press release on May 24, 2024). Furthermore, the business implementation method of "my electronic certificate" by FPoS that allows to obtain the amended information of basic four information described in an Individual Number Card (name, address, date of birth and gender) subject to the individual's consent, was accredited under the Electronic Signatures Act in October 2024 (Please see the Company's press release on October 7 and 8, 2024). Based on the above, the Company started to provide the "Digital Authentication Module" as a development software module for smartphone application in collaboration with my FinTech Inc., a subsidiary of the Company and Mebuku Ground Inc., etc. in February 2025 (Please see the Company's press release on February 14, 2025). When the business operators who provide services through the applications for smartphones incorporate the "Digital Authentication Module" into their applications, they can use the functions of identity verification, person authentication and data linking at the same level as "Mebuku ID" and can use a digital ID based on the basic four information described in an Individual Number Card on their application. This will solve the two problems of using the Internet on your smartphone, the "safety" and the "difficulty of data linking".

      In addition, "FPoS library" was incorporated into the payment application on smartphones provided by WELLNET CORPORATION, and safe and secure payment using electronic certificate started carrying in July 2025 (Please see the Company's press release on July 23, 2025). This payment application issues an electronic certificate for identity verification by an Individual Number Card using "FPoS library" when a customer creates their account, and authorizes the customer using private key generated in smartphone and electronic certificate, instead of former authentication by ID and password. Because the private key is managed in Hardware Security Module (HSM) built in smartphone and it is impossible for a third party to obtain the private key, the problems of impersonation and man-in-the-middle attack shall be solved fundamentally.

      As a result of the above, the Group's consolidated net revenue for the three months ended June 30, 2025 was 2,737 million yen, an increase of 657 million yen (up 31.6%) compared to the same period of the previous year. This was because of the growth of the flat-rate or semi-flat-rate voice services centered on "Nihon Tsushin SIM." Cost of revenue was 1,616 million yen, an increase of 441 million yen (up 37.5%) compared to the same period of the previous year. This was due to an increase in mobile network procurement costs associated with the growth of "Nihon Tsushin SIM." However, even if the number of subscribers increases, a certain gross margin can be secured because the mobile networks of both data and voice communications procured by the Company from DOCOMO have been set not to exceed the amount of the appropriate costs under efficient management plus appropriate profit. Gross profit was 1,121 million yen, an increase of 215 million yen (up 23.9%) compared to the same period of the previous year.

      The sales, general and administrative expenses was 797 million yen (668 million yen in the same period of the previous year), the operating profit was 323 million yen (236 million yen in the same period of the previous year), and ordinary profit was 317 million yen (254 million yen in the same period of the previous year).

      As a result of the above, quarterly profit attributable to owners of parent was 241 million yen (186 million yen in the same period of the previous year).

2. Explanation on financial position for the three months ended June 30, 2025

   1. ​ Assets, liabilities, and net assets Assets

      Current assets at the end of the current first quarter were 5,556 million yen, an increase of 49 million yen compared to the end of the previous year. Non-current assets were 2,224 million yen, an increase of 418 million yen compared to the end of the previous year. This was due to increases of 189 million yen in property, plant and equipment, 227 million yen in intangible assets. Deferred assets were 26 million yen, a decrease of 1 million yen compared to the end of the previous year.

      As a result, total assets amounted to 7,808 million yen, an increase of 467 million yen compared to the end of the previous year.

      Liabilities

      Current liabilities at the end of the current first quarter were 1,909 million yen, an increase of 236 million yen compared to the end of the previous year. This was mainly due to a decrease of 34 million yen in deposits received while there was an increase of 267 million yen in accounts payable-other. Non-current liabilities were 1,789 million yen, a decrease of 7 million yen compared to the end of the previous year.

      As a result, liabilities amounted to 3,699 million yen, an increase of 229 million yen compared to the end of the previous year.

      Net assets

      Net assets at the end of the current first quarter were 4,108 million yen, an increase of 238 million yen compared to the end of the previous year. This was mainly due to recording 241 million yen in quarterly profit attributable to owners of parent.

      As a result, the equity ratio was 49.6% (50.4% at the end of the previous year).

   2. ​ Status of cash flows

Cash and cash equivalents at the end of the three months ended June 30, 2025 were 4,260 million yen, a decrease of 39 million yen compared to the end of the previous year.

The status of cash flows and their factors at the end of the three months ended June 30, 2025 are as follows. Cash flows from operating activities.

Net cash provided by operating activities totaled 330 million yen (an inflow of 152 million yen in the same period of the previous year). This was mainly due to recording quarterly profit before income taxes of 281 million yen.